National Franchise Owners Association Analyzes 50 Brands and Announces Results
The Born Korea "Simple Number Comparison Is Not Appropriate"
An analysis has been raised that the average operating period of franchise stores under Theborn Korea, operated by CEO Baek Jong-won, is about 3 years. This is less than half the average operating period of about 7 years for domestic franchises. There was also a claim that while Theborn Korea's sales have grown ninefold over the past 13 years, the average sales of franchise owners have been halved.
The National Franchise Owners Association announced on the 9th the results of an analysis of 50 brands of Theborn Korea based on the Fair Trade Commission's franchise business disclosure documents. Since 2008, Theborn Korea has registered disclosure documents for a total of 50 brands. However, only 25 brands are currently in operation, including Paik’s Coffee, Hanshin Pocha, Saemaeul Sikdang, and Hong Kong Banjeom. Brands such as Haemul Tteokjjim were voluntarily deregistered by Theborn Korea.
The association stated, "Theborn Korea is expanding its franchise business like an octopus, but the actual operating period of current business locations is shortening and sales are declining," and demanded, "They should come up with measures to improve the downward sales trend."
Only 25 out of 50 Theborn Korea brands survive... "Close after just about 3 years on average"
According to the association, the survival period of Theborn Korea franchises was very short compared to the industry average. On average, it was ▲3.3 years in 2020 ▲3.2 years in 2021 ▲3.1 years in 2022. This means that they closed their businesses after just about 3 years on average since opening. Considering that the average survival period of all domestic franchises is 7.7 years, this is a very short period. Jeong Jong-yeol, a franchise trader at the association, pointed out, "The short operating period is a problem, but unlike the trend of increasing operating periods for overall franchise businesses, Theborn Korea’s period is actually shortening, which is a concerning situation."
"Theborn Korea's sales increased ninefold, but franchise sales were halved"
There was also criticism that while Theborn Korea’s sales are booming, the sales of franchise owners have been halved. Theborn Korea’s sales grew more than ninefold from about 43 billion KRW in 2010 to about 388 billion KRW in 2023. On the other hand, the average annual sales of franchise owners during the same period dropped from 875 million KRW to 386.8 million KRW, halving. Except for Paik’s Coffee and others, most franchise owners’ average sales are said to be declining.
The association said, "Many franchise owners of Theborn Korea are likely worried about closure due to continuous sales decline and short operating periods," and demanded, "Theborn Korea should not just blame the franchise owners but actively support them and establish improvement measures."
On the afternoon of the 18th, representatives from the Yeondon Bolkatsu Franchise Owners Association and the National Franchise Owners Association held a press conference in front of The Born Korea headquarters in Gangnam-gu, Seoul, to announce cases of damages suffered by Yeondon Bolkatsu franchisees. [Image source=Yonhap News]
In response, Theborn Korea said, "Theborn Korea’s strength lies in quickly developing new brands and menus in line with rapidly changing dining market trends," and requested, "Please refrain from simple numerical comparisons." They added, "Regarding franchise sales, the recent increase in the proportion of small stores has led to a decrease in average sales," and "Some brands are analyzed to have been affected by the weakened dining consumption sentiment and economic recession after COVID-19." They also stated, "The average operating period of franchises per brand in the disclosure documents has decreased due to the short operating period of newly opened stores being reflected."
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